Immigration update – September 2026

Are immigration costs taxable as benefits in kind

Sponsors should review how immigration-related costs are treated for tax purposes, particularly as scrutiny from His Majesty’s Revenue & Customs (HMRC) continues to increase. Recent professional commentary reports that HMRC has been raising the treatment of immigration costs in employer compliance enquiries.

Employer-only costs, such as Certificates of Sponsorship fees and the Immigration Skills Charge, have not generally been treated as benefits in kind because they cannot be passed to the worker. However, there have been instances where HMRC has challenged this historic treatment. An employment-related benefit is defined broadly as a “benefit or facility of any kind” provided for an employee or a member of the employee’s family or household. HMRC is reported to assert that these costs may fall within the definition of an employment-related benefit because they enable the employee to obtain or retain the relevant visa. At the time of publication, HMRC has not published specific guidance relating to the Certificate of Sponsorship fees or the Immigration Skills Charge.

The position is more complex where employers pay the Immigration Health Surcharge (IHS) on behalf of sponsored employees. This is a payment that allows those with time-limited visas in the UK to access the National Health Service without any further cost to them as and when required. Where an employer meets the cost of the IHS, the payment is less likely to qualify for relief under the foreign travel rules and is therefore more likely to give rise to a taxable employment benefit that requires reporting. Similarly, Visa application fees paid by an employer on behalf of an employee are also generally treated as taxable benefits, unless a specific exemption or deduction applies. This is because the application fee is associated with the employee’s own immigration application, unlike the Certificate of Sponsorship fee and Immigration Skills Charge, which are liabilities of the sponsor.

Organisations should review how immigration costs are recorded for payroll and employment tax purposes, as errors in reporting can result in additional tax liabilities, interest and financial penalties. This development should be explored by sponsors because tax compliance issues arising from sponsorship arrangements may attract wider regulatory scrutiny and could have implications beyond employment tax, including sponsor licence compliance.

If organisations have questions, including whether employer-funded immigration costs should have been reported or otherwise accounted for as a benefit in kind where such costs have been paid, they should contact their usual immigration contact at Birketts, who will connect them with the relevant internal tax experts who can assist further.

Business visitors, tax and social security: HMRC issues new compliance guidance

HMRC has published new compliance guidance for short-term business visitors to the UK, bringing together its existing approach to income tax, payroll and National Insurance obligations and highlighting this area as a focus of employer compliance activity.

The guidance serves as a reminder that overseas employees may trigger UK tax obligations as soon as they start carrying out work in the UK, notwithstanding that their employment contract and salary remain overseas, and that relief under a double tax treaty is not automatic, as it very much depends on the wording of each treaty. Ordinarily, employment income relating to duties performed in the UK will be subject to UK Income Tax, meaning that an employee who spends one workday in the UK could fall within the UK charge. Treaty relief may remove the UK Income Tax liability if the conditions of the relevant treaty are satisfied.

Employers are expected to assess whether treaty conditions are met, maintain accurate records of UK travel days and consider whether PAYE reporting obligations arise. Here it is important to note that for the purposes of a treaty test based on the number of days spent in the UK, any day on which the employee is physically present in the UK counts, however briefly. This includes working days, weekends, annual leave and sick leave. Days spent in the UK solely in transit between two non-UK locations do not count.

The guidance also emphasises that social security treatment should be assessed separately from tax treatment, as the two regimes do not necessarily produce the same outcome. Double tax treaties do not determine National Insurance liability; instead, the employer must consider any applicable social security agreement and the UK domestic National Insurance rules.

Particular attention is given to areas that are frequently misunderstood, including the economic employer test, the operation of special PAYE arrangements and the evidence businesses should retain to support their compliance position. They may wish to consult HMRC’s guidance on key tax concepts and common errors and retain the records supporting their treatment of each visitor, including records of UK days and workdays, remuneration and travel documentation.

In practice, businesses often devote significant attention to immigration compliance while giving less consideration to the tax and social security implications of international business travel, which can result in unexpected liabilities and compliance challenges. Falling foul of tax obligations can also have a negative effect on how the Home Office views a business’s fitness to hold a sponsor licence.

Global Talent route expanded for researchers

The UK has introduced further changes to the Global Talent route aimed at making it easier for leading researchers and emerging research talent to build their careers in the UK.

The endorsement process for certain academic and research applicants has been simplified, with streamlined requirements for qualifying academic appointments, research positions and funded research roles. In addition, access to the endorsed funder pathway has been expanded to include more than 100 research-intensive businesses, allowing eligible researchers to undertake approved research projects not only at universities and research institutes but also within a wider range of commercial organisations.

The changes are intended to support the UK’s research and innovation objectives by broadening opportunities for internationally recognised talent in sectors such as life sciences, advanced manufacturing, artificial intelligence and other strategic growth industries. The route continues to offer significant flexibility compared to sponsored work routes, allowing successful applicants greater freedom over their research and career development in the UK.

This development creates additional pathways for employers, universities and research organisations to attract highly skilled international scientists and engineers without relying solely on the Skilled Worker sponsorship system.

Right to work compliance reforms broaden employer obligations

Significant changes to the UK’s right to work regime are due to take effect from 1 October 2026, extending compliance obligations beyond traditional employment relationships into a wider range of labour supply arrangements.

Under the new framework, organisations may need to consider right to work responsibilities not only for employees, but also for certain workers, individual subcontractors and arrangements involving the provision of labour through online platforms or contractual supply chains. The reforms are accompanied by an expanded concept of liability, meaning that businesses can no longer assume responsibility rests solely with the organisation that has the direct contractual relationship with the individual carrying out the work.

Employers relying on outsourced labour, contingent workers or complex supply-chain models must review their contractual arrangements (even if they were entered into before 1 October 2026) to protect themselves from enforcement action going forward, record-keeping processes and compliance controls ahead of implementation. Existing right to work checking methods remain in place, but the consequences of failing to establish appropriate compliance procedures for the widened scheme may result in compliance issues in the future.

Right to work compliance is increasingly becoming a procurement, commercial and governance issue rather than simply an HR function, with potential implications for civil penalties, sponsor licence compliance and reputational risk.

Mandatory multi-factor authentication for Sponsor Management System users

The Home Office has begun introducing mandatory multi-factor authentication (MFA) for Level 1 users of the Sponsor Management System (SMS), with the rollout expected to cover all work route sponsors by November 2026. The SMS is the online portal where sponsor licence holders assign Certificates of Sponsorship, report changes to the organisation or the sponsored employee’s circumstances, etc.

Once enabled, users will need to complete an additional verification step each time they log in, using a one-time passcode sent to their mobile or email address registered on the SMS alongside their existing username and password. Sponsors should review the contact details held on the SMS, as access to the system will depend on accurate email addresses, mobile telephone numbers and, in some cases, dates of birth being recorded for key personnel.

Apart from checking all information contained on the SMS is up to date for existing users, sponsors should also assess whether they have a sufficient number of authorised personnel who can access the system. It is recommended that the Authorising Officer, Key Contact, and possibly one further member of staff should have Level 1 access. This is in addition to any legal advisers who may also have Level 1 access.

Maintaining uninterrupted access to the SMS is essential for ongoing sponsor licence compliance, and administrative failures caused by outdated user records or inaccessible accounts may have wider compliance consequences for sponsors, their sponsored employees, and the business’s ability to recruit international talent. As is currently the case, login details must not be shared amongst users, as this would be a reason to revoke the sponsor licence.

New Home Office guidance on irregular working hours and pay

The Home Office has issued updated sponsor guidance clarifying how salary compliance should be assessed for sponsored workers with irregular working patterns or variable pay.

The guidance reinforces that sponsors must ensure workers continue to meet both the required salary level and the relevant hourly rate throughout the period of sponsorship, rather than focusing solely on the annual salary stated on the Certificate of Sponsorship (COS). Any irregular working hours must be recorded on the COS at the time of assignment. Where irregular working hours arise after the assignment of the COS, they must be notified to the Home Office via an SMS update on the employee’s COS.

For workers whose hours fluctuate, salary assessments may be carried out over a longer reference period where the irregular working pattern has been properly identified and recorded by the sponsor. The changes reflect increasing Home Office scrutiny of cases where sponsored workers receive lower pay than expected because of reduced shifts, fluctuating hours or payroll arrangements that do not align with the information recorded on the Certificate of Sponsorship.

Sponsors are also reminded that paid rest breaks should be included when calculating working hours, while unpaid breaks should not. Businesses should review employment contracts, payroll systems and record-keeping procedures to ensure they can demonstrate ongoing compliance if audited.

Salary compliance remains one of the most common areas examined during sponsor audits, and errors involving variable working patterns can lead to enforcement action or sponsor licence sanctions.

Erasmus+ returns: immigration routes updated to support educational exchanges

Erasmus+ is the European Union’s flagship programme for education, training, youth and sport, designed to promote international mobility, learning and collaboration across participating countries. Following the UK’s agreement to rejoin the programme from 2027 (it had left the programme after Brexit), the Home Office has introduced a series of immigration changes designed to facilitate Erasmus+ activities in advance of full participation. These measures are intended to make it easier for eligible students, trainees and educational institutions to take part in approved exchange opportunities.

The changes span the Visitor, Student, Child Student and Government Authorised Exchange (GAE) routes. New definitions have been added to the Immigration Rules to recognise activities commonly undertaken through Erasmus+, including job shadowing, traineeships, skills competitions and youth work.

Under the Visitor route, state-funded schools and academies can now host Erasmus+ participants on study placements of up to six months, provided relevant eligibility requirements and safeguarding measures are met. The range of permitted visitor activities has also been expanded, allowing eligible Erasmus+ participants to undertake training, attend courses, participate in workshops and debates, complete short traineeships, engage in job- shadowing opportunities and take part in certain coaching or training assignments.

A number of important changes have also been made to the Student and Child Student routes. Erasmus+ participants can now be sponsored for courses that do not lead to an approved qualification, recognising that many exchange programmes are designed around mobility and practical experience rather than formal awards. The rules have also been relaxed to permit sponsorship for some courses below the levels ordinarily required under the Student route, where those courses form part of an approved Erasmus+ programme. In addition, Erasmus+ students will benefit from greater flexibility in relation to work placements, including exemptions from certain qualification requirements and restrictions on the proportion of a course that can be spent on placement activities.

State-funded schools and academies holding the appropriate sponsor licence will also be able to sponsor Erasmus+ participants under the Student and Child Student routes. Finally, the Government Authorised Exchange scheme has been expanded to include Erasmus+, providing an established sponsored route for eligible exchange placements and traineeships.

This development significantly broadens the range of immigration options available for international educational exchanges, creating new opportunities for schools, universities, research institutions and businesses to host overseas participants while ensuring activities can be carried out under the most appropriate immigration route.

EU Settlement Scheme travel changes remove a common practical obstacle

The Home Office has introduced changes designed to make international travel easier for holders of pre-settled and settled status under the EU Settlement Scheme. Previously, individuals who renewed their EU passport while outside the UK could face difficulties returning to the UK because new travel documents could not always be linked to their digital immigration status, in some cases requiring an additional travel permit to facilitate re-entry.

The updated arrangements now allow affected individuals to update and register a new EU passport from overseas, enabling their digital status to be linked to the passport they intend to use for travel. As a result, many EU Settlement Scheme status holders who renew their passports abroad will no longer need to obtain separate entry documentation solely because their travel document has changed.

The reform supports the wider move towards a fully digital immigration system, where permission to travel and immigration status are verified electronically rather than through physical immigration documents. This development reduces administrative burden, helps avoid disruption to international travel and lowers the risk of delays or complications when returning to the UK after renewing a passport overseas.

Ministers of Religion and Religious Workers: greater flexibility under reformed faith-based routes

The Home Office has introduced a number of changes to the T2 Minister of Religion and Religious Worker routes aimed at better reflecting how faith-based organisations operate in practice.

For Ministers of Religion, members of religious orders are no longer subject to the requirement that their role must be primarily pastoral in nature, recognising that individuals living within religious communities may undertake a broader range of duties as part of their vocation. The financial requirement has also been revised for applicants and their dependants where the individual is exempt from receiving the National Minimum Wage, addressing situations where accommodation, maintenance and support are provided by the religious organisation rather than through a conventional salary. In addition, the previous maximum length of stay under the T2 Minister of Religion route has been removed, bringing it into line with other sponsored work routes and allowing eligible individuals to continue serving in the UK without being constrained by an overall time limit.

Significant changes have also been made to the Religious Worker route. The previous resident labour consideration requirement, which included an advertising obligation, has been replaced by a requirement to demonstrate an established affiliation or connection with the sponsoring faith-based organisation. This change is intended to ensure a genuine relationship exists between the worker and the sponsoring religious body while reducing administrative burdens associated with recruitment exercises. As with the Minister of Religion route, amendments have been made to the financial requirement where applicants are not paid a salary because their needs are met by the sponsoring organisation.

Together, these changes provide greater flexibility for religious organisations while retaining safeguards intended to ensure that sponsorship is used appropriately and consistently with the purpose of the routes. Churches, faith groups and religious charities that rely on international ministers, missionaries and religious workers may find sponsorship arrangements more practical and better aligned with the realities of religious service.

Visitor route changes provide greater flexibility for training and creative sectors

The Home Office has made a number of targeted amendments to the Visitor route to ensure the Immigration Rules remain aligned with the UK’s international mobility commitments and better reflect modern business and cultural activities.

One significant change is the removal of the requirement for visitors undertaking training in the UK to demonstrate that equivalent training is unavailable in their home country. This simplifies the position for businesses and individuals arranging short-term training programmes and removes an evidential hurdle that could previously complicate travel planning.

The Home Office has also expanded the permitted activities available to the creative sector, expressly allowing artists, entertainers and musicians to attend rehearsals while in the UK as visitors. In addition, certain entertainment support staff can now assist with activities that are already permitted under the visitor provisions, supported by the introduction of a specific definition of “entertainment staff” within the Immigration Rules to provide greater clarity on who falls within this category.

These amendments are intended to reduce uncertainty, improve consistency in decision-making and ensure that permitted visitor activities more accurately reflect how international cultural, artistic and professional events operate in practice. It creates greater flexibility for businesses arranging overseas training and for organisations operating in the creative, entertainment and events sectors, while helping to reduce the risk of activities inadvertently falling outside the scope of the Visitor route.

Level 2 SMS users to be phased out as the Home Office strengthens sponsor licence controls

The Home Office has announced the phased withdrawal of Level 2 Users from the Sponsor Management System (SMS) as part of a wider programme of security and compliance reforms affecting sponsor licence holders.

From September 2026, sponsors will no longer be able to appoint new Level 2 Users, and existing Level 2 accounts will need to be either upgraded to Level 1 status, where permitted or removed before the relevant transition. All remaining Level 2 user accounts will be deactivated on 8 March 2027.

The Home Office’s objective is to improve accountability by ensuring that individuals with access to sponsorship functions are subject to stronger identity verification requirements and a higher level of organisational oversight. Sponsors are therefore being encouraged to review their current user structure, identify which individuals genuinely require SMS access and ensure that sufficient authorised personnel remain available to manage sponsorship activities.

The reforms also reinforce the expectation that sponsor licence management should be treated as a core compliance function rather than an administrative task delegated without oversight.

Inactive sponsor licences and SMS accounts come under increased Home Office scrutiny

Based on the recent sponsor guidance updates, the Home Office is taking a more proactive approach to the management of inactive Sponsor Management System (SMS) user accounts as part of a wider programme of sponsor licence security and compliance reforms.

Sponsors are expected to ensure that key personnel maintain active engagement with the SMS and that user records remain accurate and up to date. Where SMS users do not access their accounts for extended periods, the Home Office may contact them and require action to confirm that access is still needed and that their details remain correct. Failure to respond or re-engage with the system may result in user accounts being deactivated.

This could lead to sponsors not having the required number of active Level 1 users, which may lead to the Home Office suspending the sponsor licence until a new Level 1 user has been nominated. This must happen within 28 days. If no new user is nominated, the licence may be revoked.

There is also now a new requirement for Level 1 users to access the SMS regularly. The Home Office has not defined what it considers to be regular, but given that Authorising Officers must log into the SMS at least once a month it is reasonable to apply the same frequency to Level 1 users.

The Home Office has linked these measures to its broader efforts to strengthen sponsor licence governance, improve account security and ensure that only appropriate individuals retain access to sponsorship functions. Sponsors should therefore review their SMS users, remove individuals who no longer require access and ensure that sufficiently senior personnel remain actively involved in licence management and have Level 1 user access (as a minimum the Authorising Officer and the Key Contact, but also ideally one other employee or office holder, one of these 3 must be a settled worker – broadly British, Irish, have settled status under the EU Settlement Scheme or Indefinite Leave to Remain).

SMS management has become an increasingly important aspect of sponsorship for the Home Office, and if it is felt that not sufficient attention is paid to the upkeep of the SMS it can have detrimental consequences for a sponsor, including the downgrading or revocation of their sponsor licence.

Authorising Officers to receive greater visibility of sponsor licence activity

The Home Office has introduced new Sponsor Management System (SMS) controls designed to improve oversight and strengthen governance within sponsor organisations. As part of these changes, Authorising Officers will begin receiving email notifications when certain activity takes place on the sponsor licence, including changes to Level 1 User details, the addition of new Level 1 Users and amendments to key personnel information. Sponsors should therefore ensure that they always have a current Authorising Officer registered on the SMS, that their contact details remain accurate, and that internal processes are in place to review and respond to notifications received from the Home Office. For some larger sponsors, notifications will also be issued when Certificates of Sponsorship are assigned.

The changes are intended to ensure that the senior individual responsible for the licence has greater visibility of how the SMS is being used and can identify unauthorised changes or unusual activity more quickly.

This development places greater responsibility on senior personnel to actively oversee sponsor licence management, helping to reduce the risk of compliance issues arising from unauthorised access, poor governance or failures in internal controls.

UKVI confirms no compensation for travel expenses where visa decisions are delayed

The Home Office has updated its guidance on visa processing times to state expressly that UK Visas and Immigration (UKVI) will not reimburse travel costs or any other expenses where an application is refused or where a decision takes longer than the published processing time. This clarification sits alongside the long-standing advice that applicants should not book travel until a visa decision has been received.

The change serves as a reminder that published processing times are indicative rather than guaranteed and that applicants assume the financial risk of making travel arrangements before approval is granted. Employers and migrants may therefore wish to build additional flexibility into recruitment and relocation plans, particularly where start dates and international travel arrangements are dependent on the outcome of a visa application.

Temporary protection for sponsored care workers following sponsor licence revocation

The Home Office has introduced a temporary arrangement affecting certain sponsored care workers whose employers lose their sponsor licence. The guidance states that a person’s permission must not be cancelled where they hold permission as a care worker (SOC 6135 or 6145) or senior care worker (SOC 6136 or 6146) on the Skilled Worker or Health and Care Worker route, and the sole reason for cancellation would be the revocation of the sponsor’s licence. The Home Office has also confirmed that the arrangement is temporary and subject to regular review.

This change may be welcomed by affected workers, as the guidance indicates that sponsor licence revocation alone will not automatically result in the cancellation of their immigration permission while the temporary arrangement remains in place. However, the Home Office makes clear that where any other ground for a visa cancellation applies, the case must be considered under the usual rules.

Biometrics deadline no longer reset by varying an application

The Home Office has amended the Immigration Rules, confirming that applicants who vary an immigration application must still enrol their biometrics within the deadline set for the original application.

The amendment is intended to address cases where applicants submit a human rights application, do not enrol their biometrics, and then repeatedly vary the application before the deadline expires to extend the time they can legally spend in the UK under so-called ‘section 3C leave’ of the Immigration Act 1971. The new provision makes clear that there is a single period for biometric enrolment, regardless of any subsequent variation application.

For employers, the change underlines the importance of understanding the immigration status of employees and recruits who are relying on pending applications and section 3C leave. If an application becomes invalid because biometric requirements have not been met, this may affect an individual’s ability to continue working lawfully in the UK and could have wider right to work compliance implications.